Jan 10, 2019 19:52 PM GMT+0530 | 6 Comment(s)

TAX JUSTICE: A demonstrator gestures on a burning barricade on January 5, 2019 in Paris, during an anti-carbon tax demonstration called by the yellow vest "Gilets Jaunes" movement. France has a history of acting against unjust taxes. Tax priviledges of the aristocracy, like Sri Lanka's tax free cars for rulers, was an early plank of the French liberation movement.

ECONOYMYNEXT - Sri Lanka is to go ahead with a carbon tax, which is being charged on a peculiarly unjust basis targeting older, poorer vehicle owners while allowing richer arguably high use owners of new cars get off lightly.

France has been shaken by violent protests against an eco-tax by yellow-vest wearing motorists, who say they regretted voting for President Emmanuel Macron, and have called for his resignation.

Citizens of France came out against eco-taxes as they are viciously unjust, goes against principles of good governance have nothing to do with raising revenue, which should be the only purpose of taxation but are insitead designed to hurt.

Eco-taxes were promoted by European green parties and illiberal interventionists going against time honoured principles of taxation and of liberalism of causing least hurt and are designed to make payers 'feel the pain'.

In good governance taxes are expected to be levied as a bee takes honey from a flower, making payers hardly feel the burden. Originally from South Asia, the principle was adopted by Western liberals but has been violated by interventionists.

Critics who attempt to psycho-analyse promoters of European echo taxes have charged that they are acting in the same way as religious zealots of Middle Ages who wanted to make 'carbon' sinners pay 'penance' to the church of environmentalism with Mother Earth as the deity.

Economic analysts say Sri Lanka's eco-taxes should be a case study for students of public finance on how not to do fiscal policy.

Sri Lanka's eco-taxes are peculiarly painful as they have to be paid just when people have to fork out money for revenue licenses as well as an eco test and sometimes also insurance, making them 'feel it'.

The taxes make no distinction between diesel and petrol, despite diesel containing higher volumes of carbon and other impurities, emits more polluting by products, some of which could be carcinogenic.

The carbon-tax opposed by yellow-vest protests in France at least makes a distinction petrol and diesel.

In another peculiar basis, cars newer than 5 years are charged 50 cents per cubic centimetre of engine capacity while cars between 5 and 10 years are charged twice that. Cars over 10 years are charged three times.

But all cars - except classic cars - have to pass an emission test, making a mockery of the basis. Cars that do not pass the test have to tune the engine or repair it.

Older cars are generally owned by poorer and older people, who hardly use it, making Sri Lanka's carbon tax peculiarly iniquitous. Many retirees keep an older car for weekend shopping or to go the doctor.

Meanwhile hybrid cars are charged only 25 cents a cubic metre if they are less than 5 years old.

Arguably new cars are bought by richer people. Arguably they would go around more. Again no distinction is made between petrol and diesel, making a mockery of the 'carbon tax' claim.

In another peculiar basis, electric cars have been made exempt, though about half or more of Sri Lanka's electricity is made out of coal and furnace oil, both of which are either pure carbo or have a high carbon content.

Meanwhile the Finance Ministery in a statment claimed that it was a 'very small tax' to reduce risks to the environment.

For years Sri Lanka has underpriced diesel against petrol encouraging its use, taxing the cleaner fuel at a higher rate. Kerosene is also sold at a lower price.

The only distinction made is on engine capacity.

The state could collect the same volume of tax by charging about a few cents per litre of fuel, which will would be completely fair as high users will end up paying more and it will also be spread out over the period of salary or pension.

But critics say such a tax will not satisfy architects of eco-taxes who want payers to 'feel the pain'.

Meanwhile the taxes were passed by legislators in parliament who get tax free cars, while ordinary citizens are forced to pay rates of over 200 percent. The tax collecting state workers also get tax slashed cars. (Colombo/Jan09/2019)

Excellent analysis by Curionomist on why the carbon tax should be modified.I am ok with government intervening sometimes as long the intentions are good. But it has to be fair.https://thecurionomist.wordpress.com/2019/01/11/sri-lankas-new-carbon-tax-five-reasons-why-its-design-is-flawed/

The key problem with this tax is that it does not follow the polluter pays principle.1)High users pollute more. Low users do not.2) Some one has already made the point about diesel. Under pricing diesel is really bad. 3) If a tax is unjust everyone should speak up. It is good to see serious questions being raised on this website. The point about emissions test is right completely right. Charging more from old cars makes no sense.I think finance minister had been sold a bill of goods.

This carbon tax is a joke, which will have no effect other than to make the government unpopular.The first thing to do is to either charge the same tax on diesel as petrol or slightly higher.If diesel is charged a lower tax and petrol is taxed higher, this type of is simply wrong.As the article says there is fundamental injustice here.

We are expecting proper journalism with un biased journalistic from you, not this opinionated, unnessecarily hyperbolic, fearmongering trash.Please review your standards before you post this nonsense as news.

Dear EconomyNext, It is sad when a professional news site like you start being illogical. if you check the rates of this EXORBITANT carbon tax, for a 10 years or older 1500cc car used by a poor family will have to pay Rs.1/- per CC, which is Rs.1500/- per year. If the car owner thinks this is very high and affordable, how would they pump petrol?